Brazil’s Path to Legalized Gambling: Online Success and the Promise of Physical Casinos
Earlier this year, Brazil embarked on a new chapter with the launch of its regulated online betting market. While the online sector is thriving, the legalization of physical casinos remains a topic of debate, though recent political shifts suggest growing momentum.
After years of anticipation, Brazil’s legal online betting sector went live on January 1st. Experts predict the country will become a top-three global market. With over R$2 billion already collected in online licensing fees, the Brazilian economy is poised to benefit from regulated digital gambling.
However, the physical gambling sector faces similar delays that plagued the online regulation process.
Despite the Chamber of Justice and Citizenship approving PL 2.234/2022, which legalizes physical casinos, bingo, jogo do bicho, and horse race betting, Senate voting has been repeatedly postponed.
The industry remains optimistic that the bill will eventually be voted on and approved this year, especially after the election of pro-gambling Senator Davi Alcolumbre as Senate President in February.
Alex Pariente, Senior Vice President of Casino and Hotel Operations at Hard Rock International, believes Alcolumbre’s appointment will help facilitate the legalization of the physical sector.
“Alcolumbre is not only a very experienced senator, but he also has full knowledge of the importance of legalizing physical entertainment,” explains Pariente. “There is good dialogue, good collaboration. I think we have a good outlook for moving forward with this.”
Ari Celia, director of the Brazilian payment company Pay4Fun, is less certain.
“Rumors are that the government, the Senate, is considering voting on the bill that is stalled there in the first half of this year,” says Celia. “It’s politics. It may take time. It may happen. We don’t know.”
Why This Attempt at Physical Legalization is Different
Gambling was banned in Brazil in 1946. While bingo was briefly legalized around the turn of the century, several attempts to pass legislation for the physical sector have failed since then.
With licensed online gambling now a reality, the industry believes that in-person betting should follow suit in the regulated environment.
Hugo Baungartner, commercial director of local operator Aposta Ganha, has been in the industry for 28 years and has witnessed numerous attempts to legalize physical betting in Brazil come and go. However, he believes that online regulation has brought about a change in mentality in the country, which will result in the legalization of the physical sector in 2025.
“I believe that physical regulation will come this year, because gambling is a reality in Brazil, first of all,” states Baungartner.
“Secondly, the mentality has changed since 2010, or 2000. People are different, they understand. People travel the world and see everything. So, I think that online regulation will also help politicians understand that the government has powerful tools to control everything.”
The truth is that, even without regulation, physical gambling already takes place in Brazil, with jogo do bicho – a game of chance whose name translates to “animal game” – being extremely popular, despite being prohibited by federal law since 1946.
“Jogo do bicho is over a hundred years old, so it would be very hypocritical to say that this is something that has only emerged in the last decade or something,” continues Pariente. “It is always better to regulate the sector than to just know that it exists.”
“There is no protection for the population because we don’t know who is playing, we have no control over currency movements or money laundering prevention. We don’t even know who the customers are, but we know that there is an activity happening and that the government cannot control it.”
Boosting Tourism in Brazil
In addition to greater player protection provided by regulation, physical gambling could be a major boost for the tourism industry in Brazil.
Pariente notes a “stagnation” in tourism in Brazil, which receives about six million tourists per year. In comparison, the Dominican Republic regularly exceeds the 10 million mark, despite its territory fitting approximately 175 times within Brazil.
Even with the large investments resulting from sporting events in Brazil in the last 11 years, such as the 2014 World Cup and the 2016 Olympic Games, Pariente states that the country still struggles to “move the needle” with regard to foreign visitation.
Pariente says that Hard Rock could help change this scenario in Brazilian tourism, where it already has several cafes, in addition to generating jobs to foster the country’s economic growth.
“We are very interested in presenting an integrated resort as a greater impact on the economy, due to the magnitude of the investment,” states Pariente.
“Building an integrated resort that can be a destination for tourists from the region and other countries can be very useful in achieving the government’s goal, which is to increase tourism. At the same time, with the job creation related to the significant investment of an integrated resort, we are talking about billions of dollars.”
Celia agrees that legalizing the physical sector would bring a welcome boost to the Brazilian economy, especially for tourism. “There are huge opportunities,” says Celia. “Brazil has many places like Rio de Janeiro, the Amazon rainforest in the north, the beautiful beaches of the northeast, all can be enhanced with gambling.”
“It’s a matter of economics, and Brazil needs that now. So I, personally, believe it will be a high-level discussion also about tourism.”
The Effect of Online
Will the discourse around online gaming boost the hopes of the physical sector? The second half of 2024, for the online sector about to be regulated in Brazil, was marked by public and political pressure.
The situation generated such commotion that a hearing in the Supreme Federal Court was held in November to determine whether online betting laws were unconstitutional.
This decision is expected in the first half of this year, although few in the sector believe that there is a real chance that the regulation will be annulled.
Brazil is an outlier in regulating online betting before physical gambling, something that Pariente describes as “building the roof before the foundations.” However, the negative discourse around the online sector and its regulation has diminished since the beginning of the year. This seems to make the legalization of physical gambling more likely – although, in Brazil, nothing is guaranteed.
Celia is confident, declaring: “To be very honest, I’m tired of this story, because it’s not true. Everyone knows that there is a small percentage, less than 1% of the population, that is susceptible to excessive gambling. But everyone else has money, knows when to stop, knows how much they can bet.”
“The good news is that, since January 1st, when the regulated market started, I’ve talked to many people. I have the feeling that this pressure has been decreasing more and more and I hope that, in three, six months, it will disappear, because it doesn’t make sense. This kind of prejudice against gambling, in my opinion, leads to nothing.”
Potential of Physical Gambling in Brazil
The long delay between the first approval of online betting legislation by the National Congress in 2018 and the final approval by the Chamber of Deputies in December 2023 led to the proliferation of betting sites, with companies operating in the gray market. Player preferences have migrated online, raising doubts about how profitable legalized physical gambling will be.
However, Pariente believes that the omnichannel model is the ideal solution to avoid cannibalization and fears that Brazilians will not leave their homes to bet.
“We have many physical operations in the United States and what we have seen is that we have managed to find an omnichannel solution for our customers,” states Pariente. “We realized that customers did not stop frequenting our physical casinos. By offering a mobile solution, we managed to keep them within our brand.”
“I don’t believe that one activity harms the other. I think it’s a win-win situation for the company, and operators will realize that in Brazil too.”
Even within the physical sector, preferences have changed since bingo was banned at the beginning of the century.
“Brazil, originally, in the late 1990s, was always a bingo country, because basically there was a law for bingo, not for slot machines,” explains Baungartner. “It’s been 20 years since then; people have changed. Those who played bingo at that time are now 50, 60, 70 years old. So everything has changed.”
“Will bingo be a success? I still think there is a process, and, in my personal perspective, I believe that bingo will be successful. And exclusive bingo halls will also be interesting, so that people have a different game from slot machines – since, for Brazilians, at this moment, slots are more complicated, as many still do not understand them very well.”
The Timeline for Physical Gambling
Baungartner and Pariente believe that the legalization of physical gambling in Brazil will occur later this year, with the Minister of Tourism, Celso Sabino, previously predicting that the vote in the Senate would take place in the first half of the year.
Once approved by the Senate, it will be up to President Luiz Inácio Lula da Silva to sanction the law, and signs indicate that this will not be a problem.
Hard Rock will be one of the companies attentive to the specific details of the regulation, and Pariente states that the company is ready to act.
“The brand is already prepared to act quickly, as long as the laws and regulations are fair,” adds Pariente. “Having a solid legal basis, robust regulation and the viability of the project will be key factors for us to deliver a project that will remain in the country for decades.”
Pariente says that any entry by Hard Rock into Brazil will be done with caution to ensure compliance and, in the end, contribute to the main objectives of the physical gambling legislation, such as fostering tourism and reinforcing the country’s economic revenue.
“From the company’s point of view, we continue to explore our possibilities in the market, to activate opportunities in the physical segment through an integrated resort,” says Pariente. “We also continue to explore opportunities in the digital aspect.”
“But, overall, we want to ensure that everything is done in full compliance with the country’s rules and regulations, respecting the process we are going through now.”
Cautious Optimism About the Legalization of Physical Gambling
The industry consensus is that legal physical gambling will return to Brazil this year, thanks to the new pro-gambling Senate President and promising signs that online regulation is dispelling fears about problem gambling.
The momentum for gambling in the country is certainly growing, and while Pariente’s analogy – “the roof before the foundations” – is a reminder that nothing is simple in Brazil, everything indicates that the frustrations of previous attempts to legalize in-person gambling will be left behind.
Pariente is eager to see the process accelerate, especially to avoid the problems with the gray market caused by political delays in online regulation.
“All these gray market issues that we experienced in the digital world are something that we can probably avoid now, when we analyze the regulation of physical gambling,” notes Pariente. “We have seen the benefits of accelerating the process. In addition, we will take advantage of all the difficult discussions that we have already had when regulating the digital world. For this reason, I believe that the process will be much faster.”
Brazil can benefit significantly from an economic point of view, with the potential for a much-needed boost in tourism and considerable job creation – especially with giants like Hard Rock preparing to operate.
By leveraging the lessons learned from online regulation, 2025 may, in fact, be the year in which Brazil finally welcomes a fully legalized physical betting sector – consolidating the country as a global powerhouse in both the digital and in-person environments.
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